Trade wars hit New Zealand's economy

Industry News | 6 November 2018

Far-off trade wars between China and America are having an effect in New Zealand.


The ongoing trade wars between China and the US have been impacting upon the economy in New Zealand, data has shown.

According to ANZ's commodity price index, there was a decline of 2.4 per cent in October, marking the fifth monthly fall and the biggest annual decline since mid-2016, Radio NZ reports.

On a currency-weighted basis, the New Zealand dollar saw the index dip by 1.6 per cent in October, meaning it is up from 1.6 per cent a year earlier.

ANZ economist Miles Workman blamed global trade disputes for the difficulties, problems he says are being exacerbated by a weaker dollar.

"Trade disruption has dented confidence in New Zealand's main export markets, with the impact on China of particular concern, given our exposure to this market," he added.

Dairy prices were down by 12 per cent year-on-year, while horticulture, aluminum, meat and fibre also declined, the commodities index showed.

Although aluminum prices had lifted by 0.3 per cent compared to September, tit-for-tat trade battles between China and the US meant the flow of scrap metal from America to China and back to the US was disrupted, and this had a knock-on effect for New Zealand.

Only forestry showed a relatively strong month thanks to log prices climbing six per cent, but even that had eased slightly compared to the month before.

China, Australia and other members of the Asia-Pacific Economic Co-operation group account for around 72 per cent of New Zealand's total exports.

Britain's international trade secretary Liam Fox recently said he would be prioritising a free trade deal with New Zealand after Brexit, while the Antipodean nation has also not ruled out a similar arrangement with the European Union.